Billions ride on Medicaid debate

Program expansion would add millions of Texans.

A new report shows 2011 health care costs for the uninsured in Bexar County, where around 25 percent of residents lack insurance.

In a state where 6.1 million residents, nearly 1 in 4, had no health insurance in 2011, there is a lot riding on the debate in Texas over whether to include more people in Medicaid.

Gov. Rick Perry opposes the expansion, which could cut Texas' uninsured rate by half, even as some other Republican governors, most recently Rick Scott in Florida, changed course and decided to adopt it.

Some county government officials and nonprofits are speaking out in favor of expansion because they see how much local money from taxes and charity could be saved on what's now unreimbursed health care spending.

The expansion, which is optional under the Affordable Care Act, would bring billions in additional federal dollars to Texas to extend Medicaid coverage to low-income adults, most of whom now are ineligible.

According to the Texas Health and Human Services Commission, the state could receive more than $24 billion in federal matching funds from 2014 to 2017 to expand coverage while paying about $1.3 billion from state revenue, mostly in administrative costs.

Over 10 years, Medicaid expansion could bring an estimated $100 billion in federal funding to Texas while requiring the state to put up $15.5 billion.

Between 1.3 million and 1.8 million uninsured low-income adults in Texas would become eligible for Medicaid under the expansion.

In a letter he sent in July to Health and Human Services Secretary Kathleen Sebelius, Perry, who fought President Barack Obama's health care plan, characterized the proposed expansion as a federal attempt to “socialize health care.”

He also calls Medicaid “a broken system” rife with abuse and waste and that Texas could do a better job if it had a block grant to spend as it sees fit.Last week, two groups in favor of the expansion released a report showing more than $775 million a year in federal funds could flow to Bexar County by 2016 if lawmakers adopt the highest level of expanded Medicaid funding.

The report by Texas Impact and Methodist Healthcare Ministries of South Texas Inc. also estimates local tax revenues would increase by $130 million over four years starting in 2014, as more people sought health care under the program.

As it stands now, the uninsured do receive medical care in Bexar County but at a steep local cost, the report shows.

In 2011, University Health System, the county hospital district, spent more than $280 million in unreimbursed health care costs to treat the uninsured.

The Bexar jail and other county providers spent another $450,000 in unrecouped health care costs. Private and public hospitals shelled out more than $130 million in charity care in 2010, the latest number available.

Judge Nelson Wolff, an expansion proponent, said many Bexar County residents who lack insurance work for companies that don't provide it.

If the county didn't have to pay so much for health care for the uninsured, it would allow it to cut taxes.

“That's just unheard of,” he said. “Not only would there be a huge economic benefit, we would be helping more people.”

The report offered different estimates of the dollars the state and county would receive, depending on the funding structure lawmakers choose if they pass the expansion.

“Because we are a very poor city and South Texas has the highest percentage of the poor and uninsured in the nation, we stand to benefit greatly from the expansion,” said Kevin C. Moriarty, president and CEO of MHM, a nonprofit that is part owner of the Methodist Healthcare System.

An estimated 161,000 more people in Bexar County could receive Medicaid under the expansion, said Jessica Munoz-Sherfey, a spokeswoman for MHM.

About 25 percent of county residents currently lack insurance.

As it is now, Medicaid covers low-income children, the elderly, those with disabilities and pregnant women.

About 83 percent of the nearly 3.3 million Texas residents on Medicaid either are children or those 65 or older. More than half are female.

Leni Kirkman, spokeswoman for the University Health System, which receives about 25 percent of its revenue from county property taxes, said about 26,000 uninsured patients enrolled in Carelink, its financial assistance program, would be eligible for Medicaid under the expansion, saving local taxpayers $53 million a year.

The majority of UHS funding comes from paying patients, Kirkman said.

Studies show around $1,800 of the average Texas family's annual health insurance premium is due to “cost shifting to cover uncompensated care,” she added.

Dr. Camis Milam, director of medical services at the Center for Health Care Services, the county mental health authority, said the center spends about $18 million a year on about 5,000 clients who lack health insurance.

“If Texas rejects the expansion, our waiting lists will grow longer, and more people with (serious mental illness) and substance abuse issues will end up in emergency rooms, hospitals and jails,” she said.

The expansion, which could start in 2014, depending on the timeline states choose, would open enrollment to low-income adults living below 138 percent of the federal poverty level — $31,809 a year for a family of four, $15,415 for a single person.

Only citizens would be eligible.

“As if saving local taxpayers millions on low-income care isn't enough, lawmakers can actually bring new revenues to their districts without raising taxes — and make their constituents healthier in the process,” said Bee Moorhead, Texas Impact executive director.

Debate over expansion

The Texas Public Policy Foundation, a conservative advocacy group in Austin, called expanding Medicaid without instituting fundamental reform “financially reckless and morally unconscionable.”

“Although the expansion represents a short-term infusion of federal dollars that could mildly offset uncompensated care for Texas hospitals, it does nothing to address the structural failures of a program that provides abysmal health care and poor access to physicians,” said Arlene Wohlgemuth, executive director for the foundation.

Studies show Medicaid enrollees have worse health outcomes than those on private insurance and even those without any health insurance, she said. Many wind up in emergency rooms because they lack access to primary care.

Moorhead countered that those studies have been “decisively debunked.”

“The truth is, having insurance saves lives,” she said.

Some Republican lawmakers have said they're open to the idea of expansion, but only if the federal government affords states flexibility, such as allowing them to require Medicaid patients to make co-payments.

Right now, Medicaid enrollees aren't required to pay for any of their coverage.

“Simply carrying out the expansion as directed by the Affordable Care Act is not a realistic option for Texas because it fails to put the program on a responsible, sustainable path,” said Sen. Jane Nelson, R-Flower Mound, who leads the Senate Health and Human Services Committee.

A spokesman for Sen. Tommy Williams, chairman of the Senate Finance Committee, said he believes modest co-payments for Medicaid enrollees would make expansion of the program more attractive for state leaders and called it one of the reform ideas that will be discussed in the coming months.

Rep. John Zerwas, R-Richmond, a doctor and member of the House Appropriations Committee, said Thursday he opposes the expansion under Medicaid's current rules and regulations, but said he would be open to the program with certain reforms, including not just co-payments for enrollees, but “rational limits” on the benefits mandated and incentives for healthy behaviors.

Zerwas said such change, based on managed-care models, would give Medicaid patients the needed “skin in the game” to make the program work.